Not walls, but many more windmills

On May 12, Prime Minister Narendra Modi addressed the nation to provide an overview of GoI’s plan to rebuild and grow the Indian economy, currently buckling under the Covid-19 pandemic and the nationwide lockdown instigated by it, on a framework of liquidity, investment and reforms. The economic stimulus package of Rs 20 lakh crore — about 10% of GDP — promises to be a booster shot, a catalyst to spur growth, accelerate job-creation and alleviate poverty.

‘There is no dependence that one can be sure of, but a dependence upon oneself,’ goes the saying. It is commendable that GoI has chosen to take this path with the launch of the ‘Atmanirbhar Bharat Abhiyan’ initiative, underlining self-reliance. Also, one is hopeful that the support measures and reforms finance minister Nirmala Sitharaman has been detailing will clarify this plan further.

Ficci had recommended a direct infusion of `2 lakh crore in a ‘Bharat Self-Sufficiency Fund’, thereby potentially generating five times that amount. As the financial packages roll out, one can safely assume that we will see a combination of measures with credit guarantee being a significant tool to reach the `20 lakh crore mark.

Aparallel effort on a strong fiscal consolidation plan to avoid a downgrade is critical. Ficci, in its Fiscal Response Strategy, requested for collateral-free loans for MSMEs with government guarantee. The `3 lakh crore package should help bring back to life a large proportion of MSMEs.

For the six crore MSMEs employing 11crore people, focus must be on growth, enabled by liquidity, quality, capability enhancement and market access. Additional lines of credit for NBFCs and MFIs will also aid MSMEs. The change in the definition of MSME will also be a facilitator.

Atmanirbhar Abhiyan has also focused on providing additional liquidity support to the most vulnerable sections of society, including migrant labourers, small traders, etc. The proposals to introduce a national floor wage for all workers, extend MGNREGA to enrol migrant workers, extend social security funds for the unorganised sector as well as gig workers, provide special credit facility for street vendors, etc, will go a long way in bringing transformation at the grassroots level.

Success can be enjoyed only if all sections of society share the benefit. Going ahead, one hopes greater thrust will be laid on some of the most battered segments of industry such as tourism, hospitality, aviation and healthcare.

Significant packages for these sectors, which have seen the maximum dip in demand — and will also take much longer to recover — are needed. The healthcare sector also needs a big impetus.

Beyond Covid-19, there is a need to strengthen healthcare infrastructure, enable universal access, increase the number and better the quality of healthcare workers, and use the strengths of digitalisation and R&D to make India a healthy nation. Finally, for large corporates, a Covid-19 liquidity bridge for providing guarantee to banks — so as to give them comfort to restructure/extend loans to companies whose balance sheets have been impaired — is needed.

Large companies provide the critical link in the chain between the economy and the people, being able to provide employment, especially to India’s aspirational youth. Conscientious capitalism will help India rise out of this crisis and make it a truly inclusive nation.

This is not about India being a protectionist nation. As the Chinese saying goes, ‘When the winds of change blow, some build walls and others build windmills.’ India needs to build digital, technological, ecological windmills. And windmills generating more empathy.

The writer is president, Federation of Indian Chambers of Commerce & Industry (Ficci)

This piece appeared as an editorial opinion in the print edition of The Economic Times.